HM Treasury, via Flickr. CC BY-NC-ND 2.0
On 30 October, the government set out its budget – the first since the Labour government took office in July. This budget signals the government’s priorities and will shape its agenda for months and years to come.
While news headlines will largely be dominated by discussions around tax, and arguments over the size of the country’s ‘financial black hole’, there were several other important commitments around housing, work and social security.
Here are five key takeaways for those invested in social justice, poverty and inequality in London.
1. A missed opportunity on child poverty
The government has made the choice to keep the two child limit, a punitive policy that locks tens of thousands of London's children in poverty. It's hard to look beyond this choice when assessing the impact of this budget.
Manny Hothi, chief executive of Trust for London
The government has repeatedly stated its ambition to end child poverty. But the budget didn’t reflect this.
It was a golden opportunity to end the two child limit, which caps the number of children that families can receive means-tested benefits for at two.
In practice, the policy pushes hundreds of thousands of children into poverty, with no evidence that is incentivises work.
Child Poverty Action Group estimates that scrapping the policy would lift 300,000 children out of poverty and reduce the depth of poverty for 700,000 more. No other action would help so many children so quickly, or be such a cost-effective way to do so.
In London, one in three children are growing up in poverty. For the thousands of Londoners affected, the government’s decision to keep the two child limit in place will be the biggest impact the budget has on their lives.
2. Mixed announcements on social security
Social security should be a safety net when people need it most. Right now, it’s not covering the cost of basics in London.
The budget introduced some positive steps, such as capping Universal Credit debt deductions. This will boost the incomes of hundreds of thousands of the most vulnerable families.
But these changes aren't enough. Benefit levels are at a 40-year low, and many can’t even meet their most basic needs. The decision to uprate benefits by just 1.7%, in line with inflation, won’t change that.
The government also confirmed plans to continue with reforms to work capability assessments, which assess if people are “fit” for work.
These assessments are often undignified and cruel, reducing the income of Disabled and long-term sick people who are unable to work.
If the government is serious about tackling poverty, tweaking an already failing system isn’t enough. It needs to transform the social security system so that it means no one has to go without essentials. And it must challenge the rhetoric that vilifies the most vulnerable.
3. Good news for low-income earners – but real Living Wage is needed
The Chancellor confirmed that the national minimum wage (called the National Living Wage) will go up to £12.21.
This is welcome news for those on the lowest incomes. But it’s important to remember that this is the legal minimum rate an employer must pay. It still falls short of the cost of living – especially in London.
And it’s different to the real Living Wage, a voluntary wage rate and the only wage rate based solely on the cost of living. The real Living Wage is £12.60 - and £13.85 in London, reflecting the higher cost of living.
The campaign for a real Living Wage is as important as ever, especially in London.
4. Some positive news on affordable housing
For Londoners, one of the main things to look out for in the budget was announcements around housing. And there was some good news.
The chancellor announced a large investment of £3.1bn for affordable housing – though it remains to be seen how much of this will go on social housing.
It also announced that it will reduce the Right to Buy discount, and allow local authorities to keep all of the money from selling social housing.
This is a vital change for London’s local authorities, and will help them to keep more of their social housing stock. It will also give slightly more wriggle room to respond to local housing crises.
5. But London’s housing crisis needs much, much bolder action
London is at the centre of the country’s housing crisis. More than 300,000 Londoners are on the waiting list for social housing. And one in 50 Londoners are homeless and in temporary accommodation, as homelessness in the city has soared to the highest levels on record.
To fix this the crisis we need a once-in-a-generation investment in social homes.
And in the meantime, the government needs to provide more funding to local government to deal with the housing crisis, and permanently unfreeze LHA rates so that fewer people are pushed into homelessness.
But the government kept LHA rates frozen at their current levels. In London, this means that only 5% of available rents are affordable to those on the lowest incomes – far below the 30% it’s meant to be.
And although it announced £1.3bn additional funding for local government – spread across the country – this will barely touch the sides of the £700m blackhole London councils are facing as they try to grapple with the housing crisis.